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Salesforce.com joins forces to buy Informatica

12/08/2015 by

Salesforce.com, the global leader in customer relationship management (CRM) tools, has joined forces with Microsoft to bring about the private sale of Informatica. The buyout was said to be worth $5.3bn (£3.4bn), though the number of shares each firm has in the company has not been revealed. Informatica, the integration specialist, has already been de-listed from NASDAQ; in addition, Anil Chakravarthy, chief product officer, has been announced as the new and acting chief executive officer, whilst the former CEO, Sohaib Abbasi, is to stay with the company as chairman.

It was in Redwood City, California, that Informatica was first founded in 1993. The area is still closely linked with Oracle; however, many other tech firms have seen their beginnings here. Informatica has become a specialist in both cloud and on-site integration; data warehousing; extract, transform and load (ETL); replication; virtualisation; and data masking. Around 5,800 enterprise customers currently utilise its service, including high-profile firms such as Citigroup, BT, General Electric, Time Warner, Johnson & Johnson and News Corp. Annual revenues have now reached $1bn, and as of 2015’s second quarter the firm saw revenue growth of 13%. Taken on its own this is quite considerable growth; however, the profit gains are largely viewed as flat-rate growth, which means the firm is at risk of unsustainable expansion unless seeking partnerships with other firms.

There were several rumours earlier in 2015 that Informatica was to be acquired by Permira ‒ a private equity firm ‒ and the Canada Pension Plan Investment Board. At the time the buyout figure was speculated to be $5.3bn ‒ the same as Salesforce.com and Microsoft’s joint purchase price. For these two companies, buying Informatica might have been seen as a logical step. The integration company already has a strong partnership with Microsoft, aiding the company in its data integration; in addition, Informatica Cloud was launched in 2006 and has become significantly relevant in the modern age, particularly as Salesforce.com has increased its cloud dependence.

There is some speculation over what the joint ownership could mean for the future of Salesforce and Microsoft. By collaborating in the purchase the two companies might simply be attempting to plug gaps in their current portfolios and ensuring that streamlined optimisation continues as quickly and simply as possible, which would be far easier than going through the full acquisition process; alternatively, such a plan could be on the cards, with this private sale just the first step towards an official merger.

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